Sackville, Justice Ronald --- "Mega-litigation: towards a new approach" (FCA) [2007] FedJSchol 13

Speeches Supreme Court of NSW Annual Conference Quay West Resort, Central Coast, New South Wales 17-19 August 2007 Mega-litigation: Towards a New Approach Justice Ronald Sackville Introduction 1 There is a marked disparity between the rhetoric of the courts, which emphasises the ‘just, quick and cheap’ resolution of disputes,[1] and the harsh reality of mega-litigation. By mega-litigation, I mean: ‘civil litigation, usually involving multiple and separately represented parties, that consumes many months of court time and generates vast quantities of documentation in paper or electronic form’.[2] 2 Mega-litigation is an increasing phenomenon[3] which presents the courts with apparently intractable difficulties. Not only do the parties incur vast costs, often utterly disproportionate to the subject of the dispute, but mega-litigation imposes great burdens on the judicial system and on individual judges unfortunate enough to be allocated such cases. 3 Courts face a choice. Either they can remain supine in the face of the challenges presented by mega-litigation or they can respond creatively to those challenges. The first path self-evidently leaves the courts vulnerable to the demands of well-resourced and determined litigants. The second requires a re-evaluation of some fundamental tenets of the judicial process. Mega-litigation 4 Chapter 1 of the judgment in the C7 Case is entitled ‘Mega-Litigation and Its Discontents’. The Chapter is not an attempt to equate the superficial civility of a forensic contest with Freud’s view of civilisation as a thin veneer repressing instinctive or atavistic impulses, especially Eros.[4] Rather, the Chapter has the more modest aim of identifying some of the challenges and difficulties that face the courts in managing mega-litigation. 5 The judgment in the C7 Case refers to recent examples of mega-litigation in Australia, some of which have consumed vastly more court time than the mere 120 hearing days required by the C7 Case itself.[5] The Australian record for a lengthy civil trial appears to be the 471 hearing days taken up by the Duke litigation in South Australia.[6] The disastrous BCCI litigation in the United Kingdom, which was abandoned by the claimants on the 256th day of the trial, serves as a reminder that mega-litigation is not a phenomenon unique to Australia.[7] On any view, so it would seem, mega-litigation is on the increase. 6 Courts have frequently lamented the burdens imposed on them by mega-litigation and have complained of their powerlessness in the face of litigants who, for whatever reason, decide to press on notwithstanding huge and often disproportionate costs burdens.[8] If judicial attempts to control mega-litigation are to be more than tokenism, it is necessary to understand the nature of the challenges to the court system presented by mega-litigation. This, in turn, requires three issues to be addressed: Why is mega-litigation on the increase? Why are the courts so ill-equipped to deal with mega-litigation? What can be done about mega-litigation? Why is Mega-Litigation on the Increase? 7 One obvious answer to the first question is the increasing sophistication and complexity of commercial transactions. Globalisation, privatisation of public enterprises and technological and financial innovations have created fertile opportunities for disputes which involve very large amounts of money or are likely to have a major impact on the profitability or even viability of large corporations.[9] In fields such as competition law or intellectual property, for example, the issues are often not only legally complex, but involve extremely difficult and wide-ranging factual issues. Disputes between large corporations (including government agencies), if they are not resolved by agreement, may require minute forensic examination of complicated dealings between multiple parties over a long period of time. Moreover, in a world of increasing specialisation and ever more exquisite technological and financial refinement, no major litigation seems to be complete without extensive contributions from experts in a variety of disciplines. Questions of market definition, for example, are notorious for generating voluminous lay and expert evidence. 8 To these factors must be added the sheer size of many multinational or even local corporations, particularly those operating in a market dominated by a few firms or by a monopolist. When these corporations become embroiled in disputes, the stakes may be very high indeed. Similarly, the collapse of a large corporation, a surprisingly common phenomenon even in times of unprecedented prosperity, might result in disappointed creditors claiming many billions of dollars.[10] By comparison, the cost of mega-litigation, even if undertaken on a grand scale, often seems to be relatively modest. 9 The law itself has encouraged the trend towards mega-litigation. In commercial disputes, the certainties (or, at least, apparent certainties) of the law of contract and of commercial law in general, have long since given way to the search for 'individualised justice'.[11] The paramountcy of the objectively ascertained contractual intent of the parties to commercial transactions has yielded to ameliorative doctrines. Some, such as promissory estoppel and unconscionability, have been formulated by the courts, while others, such as the prohibition on misleading or deceptive conduct in trade or commerce,[12] have been imposed by legislatures. The more flexible the principles to be applied by the courts, the broader the scope of admissible evidence and the greater the likelihood of a prolonged hearing. When the relevant principles require findings to be made as to the subjective intentions or motives of particular parties, the scope of the forensic inquiry is likely to be greatly extended and the contest rendered more bitter than otherwise would be the case. 10 In modern times, almost every large commercial dispute involves competing claims on the exercise of a court's discretionary powers. For example, the 'remedial smorgasbord'[13] offered by s 87 of the Trade Practices Act and similar legislation opens up broad, if not limitless lines of inquiry, that have the potential in hard-fought cases to increase costs substantially. As the Chief Justice has remarked, the price of individualised justice is ever-greater length and complexity of litigation and: 'an immense strain upon the court system, which was never designed to cope with the volume of business currently brought to it'.[14] 11 It is not only the substantive law that has been adapted to meet the perceived needs of individualised justice. Procedural innovations such as class actions[15] and the relaxation of the rules of standing,[16] have increased the opportunities for mega-litigation. For example, the statutory relaxation of the rules of standing opened the way to mega-litigation instituted by a consumer organisation which sought injunctive relief to restrain allegedly misleading statements in an advertisement concerning the health consequences of passive smoking.[17] The proceedings ultimately occupied 91 days at trial and 15 days on appeal, not to mention numerous interlocutory and post-appeal hearings. 12 These procedural innovations are an aspect of the 'access to justice' movement. The catchcry of 'access to justice' undoubtedly conveys a powerful message and is designed to promote the ideal of equality before the law.[18] Measures intended to enhance access to justice do not, however, necessarily lead to cheaper or more expeditious dispute resolution in the courts. On the contrary, legislation or rules of court which are designed to enhance access to justice may impose very great burdens on the courts. 13 These explanations for the growth of mega-litigation do not tell the whole story. A further contributing factor is the immense burden placed on the parties to modern litigation (and often on third parties) by the regime governing discovery and the production of documents. Contrary to the conventional wisdom that technology is an aid to efficiency, the electronic age has made discovery an even lengthier and more expensive process than hitherto. The paperless office may be more environmentally friendly, but it does nothing to diminish the costs associated with the process of discovery. Indeed, in the context of the Australian costs-shifting regime (in which the unsuccessful party is usually ordered to pay at least a proportion of the successful party's costs), the need for extensive discovery can actually constitute a powerful disincentive to a negotiated resolution of the proceedings. This is especially likely to be so if the costs of providing discovery turn out to be disproportionate to what is at stake in the proceedings. 14 Australian courts and, for that matter, legislatures, have not yet come to grips with the dimensions of the problem posed by electronically stored information ('ESI'). In the United States , it has been estimated that ESI now counts for 95 per cent of all information stored by businesses. A single CD-ROM is capable of storing the equivalent of many thousands of pages of material, while a hard drive can store the equivalent of hundreds of CD-ROMs. In consequence: 'the volume of information created and stored is beyond anything that existed in the twentieth century, when records were predominantly created and stored on paper'.[19] 15 A Committee of the Judicial Conference of the United States , the Advisory Committee on Civil Rules, recommended amending the Federal Rules of Civil Procedure to make special provision governing the discovery of ESI.[20] The Committee gave four reasons for its decision to create new rules: the sheer volume of ESI;[21] the dynamic nature of ESI, in particular the fact that computers automatically generate information, often without the knowledge of the operator;[22] the difficulty (although not impossibility) of deleting ESI; and the fact that ESI may need to be retrieved, restored or translated before it can be assessed for relevance or an entitlement to legal professional privilege. 16 All the elements identified by the Committee were present in the C7 Case and contributed to the vast costs incurred by the parties. The electronic database compiled for the case consisted of 85,653 documents, comprising in all 589,392 pages.[23] While an electronic database facilitates the compilation, searching and inspection of material, it does little, if anything, to reduce the burden of scrutinising the 'documents' (including their attachments) to determine their status for the purpose of the proceedings. 17 For every action there is, however, a reaction. The evidence in the C7 case showed that one of the parties, News Ltd, implemented a policy of deleting electronic communications after a period of three days, by over-writing the back-up disks.[24] The effect of this policy, if not its intention, was to deny the applicants ('Seven') the opportunity to cross-examine News' officers by reference to the deleted emails (unless a particular email happened to be retained in hard-copy form). While News' document deletion policy was ultimately held not to be critical to the outcome of the proceedings, the judgment records[25] that care will need to be taken in the future 'to ensure that cynical business practices are not rewarded by forensic advantages'. 18 One of the allegations made in the C7 Case gives a clue to a further possible explanation as to why mega-litigation appears to be on the rise. The respondents claimed that Seven had regularly instituted litigation against its business rivals as a means of pursuing commercial objectives not directly related to the relief sought in the litigation itself.[26] It was not necessary to determine the truth or otherwise of that general allegation. Nonetheless, the judgment did examine arbitration proceedings instituted by Seven pursuant to the compulsory access regime created by the Trade Practices Act.[27] Seven sought to gain access to the so-called Telstra Cable in order (so it claimed) to supply sports channels directly to retail customers. The judgment records a finding that Seven had no serious intention of utilising the Telstra Cable to provide pay television services to retail customers. On the findings made in the C7 Case, Seven had initiated and pursued a retail access arbitration in order to improve its chances of attaining quite different commercial objectives, namely wholesale access for its C7 pay television channel on the Foxtel retail pay television platform.[28] 19 This finding illustrates the point that a party may be prepared to initiate and continue expensive legal proceedings (in the particular case, an access arbitration) as part of a broader corporate strategy. It is by no means unthinkable that a well-resourced party might be prepared to incur very heavy legal expenses in pursuing mega-litigation if it considers that the proceedings are likely, one way or another, to further its wider commercial or strategic objectives. The price, although high in dollar terms, might be relatively modest in comparison to the advantages that are thought to flow from pressing on with the litigation. In these circumstances, mega-litigation becomes merely one component in a much more extensive rivalry between firms. In the modern world, such a contest is likely to be fought out not only in the courts, but in the media, in the political arena and before regulators. Why Are the Courts Ill-Equipped to Deal with Mega-litigation? 20 The common law adversary system evolved at a time when the world was innocent of typewriters and carbon paper, let alone photocopiers, fax machines, computers, emails, mobile telephones, text messages, wireless email devices and other modern marvels of information technology. Doubtless the system was well enough adapted to the resolution, albeit at a stately pace, of civil disputes. These were the product of a much simpler commercial environment, in which few records had to be kept or were kept. The copying of documents was an extremely labour-intensive task. Furthermore, the job of the court was to adjudicate on the issues presented to it by the parties, who were free to conduct the proceedings in as leisurely a fashion as they wished. The court's role was limited to deciding disputes, not managing litigation. 21 In the latter part of the twentieth century, profound changes occurred in the way in which Australian courts discharged their obligations.[29] The most significant developments include: widespread acceptance of the principle of judicial self-governance; the introduction and implementation of judicial case management as a means of achieving the timely disposition of cases and the efficient use of judicial time and court resources; the emergence of a symbiotic relationship between case management and alternative dispute resolution; and a greater degree of accountability of the courts to the general community. 22 While these developments have transformed the judicial role,[30] they have not ensured that the courts can or will exercise effective control over mega-litigation. Certainly the courts have more weapons at their disposal than they once did. For example, continuity of pre-trial case management tends to discourage the parties from indulging in disruptive and costly interlocutory disputes. The parties can be encouraged, or even compelled, to attend mediation or other forms of alternative dispute resolution with a view to resolving the litigation, or at least narrowing the issues in dispute. They can be directed to specify categories of documents to be produced on discovery, so as to reduce the burden that would otherwise flow from an open-ended order for discovery. 23 The court can also make directions designed to promote the orderly and expeditious conduct of the trial. It has power to order that certain issues be decided separately and in advance of other issues in the proceedings and may well do so if such a course is likely to save the court time and legal costs. The court can impose a limit on the number of experts who are to prepare reports on particular issues and can require the experts to give concurrent evidence if that procedure is likely to assist the court. Time limits can be set, within reason, for the cross-examination of lay witnesses and page limits imposed for written submissions. In multi-party litigation, directions can be given to prevent duplication in cross-examination or, for that matter, in making submissions. 24 All these powers and more are available. Yet the reality is that the exercise of these powers in the context of mega-litigation depends to a great extent on the co-operation of the parties. In the adversary system, particularly as administered by courts subject to the constraints imposed by Chapter III of the Constitution, the overriding limitation is that the judge must not compromise his or her role as an independent and impartial judicial officer. If that limitation is transgressed, however well-intentioned the judicial intervention, the trial may miscarry. 25 It follows that if the parties to mega-litigation are not prepared to co-operate - with each other and the court - a judge may find it extremely difficult, over the active opposition of the parties, to make orders that might be likely to curtail the scope of the litigation and make the trial shorter. Orders, for example, limiting the nature and scope of evidence that a party can adduce in support of its case (other than by applying the rules of evidence) could place the integrity of the trial at serious risk. 26 Some of the constraints on the ability of the courts to control mega-litigation are obvious enough. As the C7 Case itself shows, no matter how strongly (or repeatedly) the court urges the parties to resolve their differences, they cannot be compelled to reach agreement. It is true that the court may have power to direct the parties to undertake mediation with or without their consent,[31] but if the parties are determined to proceed with the litigation, compulsory mediation is not likely to produce a negotiated resolution. 27 Similarly, a party cannot be compelled to abandon pleaded causes of action, except in consequence of orders made on an application for summary judgment or for orders striking out pleadings.[32] Despite legislation designed to give the courts wider powers to grant summary judgment,[33] in practice it is difficult for a party to persuade the court that its opponent has no reasonable prospect of success, particularly where the facts are in contest. In the absence of a successful strike out or summary judgment application, a party is entitled, if it wishes, to advance a multitude of overlapping contentions. The court may discourage such an approach. It may attempt to persuade, cajole, exhort or even threaten. But in the end, the scope of the litigation is essentially in the hands of the parties. 28 Another practical constraint on the power of the judge to curtail the enthusiasm of parties to mega-litigation is the information deficit. A workable general principle is that the more the trial judge has read and understood, in advance of the trial, of the pleadings, the witness statements (or affidavits) and written submissions, the greater his or her chances of conducting the trial efficiently and expeditiously. But even the most diligent judge cannot know in advance of a hearing as much about a party's case as that party's legal representatives. Or, to put the point slightly differently, a judge cannot be sure that he or she knows as much about the case as the legal representatives of the parties. 29 The information deficit requires the trial judge to exercise some degree of caution before overriding the parties' assessment of the nature of the evidence that should be tendered in their respective cases and the issues that need to be addressed in the litigation. For example, although Rules of Court typically give the court power to direct that no more than a specified number of expert witnesses be called,[34] it is not necessarily a simple matter to make such a direction in the face of strong objections by the parties. In particular, in multi-party litigation it may be difficult to insist that a separately represented party not be permitted to put on evidence from any expert it selects, even if there is a risk of duplicating the material in other expert reports. Similarly, if a party insists that its case requires evidence to be adduced from two or more experts, and maintains that position in the face of sceptical questioning from the bench, a refusal to permit that course might be seen as unfair or overly restrictive. 30 In the C7 Case, reports from five experts were tendered on market definition questions: two by Seven; two by the News respondents and one by the PBL respondents.[35] In retrospect, in my view, the issues requiring consideration would have been sufficiently exposed had Seven been content to rely on reports from one expert and if the respondents collectively had also limited themselves to tendering the report of a single expert. Indeed, on one view, Seven's case suffered from having two experts on market definition whose views did not altogether coincide. 31 As the judgment in the C7 Case records, it became clear that a significant proportion of the costs incurred in compiling expert reports, and in arranging for their authors to give oral evidence, was wasted.[36] Even so, in the face of assurances from senior counsel that multiple reports were justified by the unusual character of the proceedings and the complexity of the market definition issues, I did not feel able to direct that only two experts in total should prepare reports and give evidence. Knowing what I now know, I think that view was mistaken. But at the time the judgment had to be made, the information deficit suggested that I should err on the side of allowing the parties to pursue their own course. 32 Analogous problems arose in the C7 Case in determining the mode in which the experts should give their oral evidence. There is a school of thought that certain kinds of expert evidence can be presented most helpfully and economically by means of concurrent evidence. Indeed, the Uniform Civil Procedure Rules 2005 specifically authorise the court to direct experts to give evidence in this manner.[37] A proposal in the C7 Case that the competition experts should give evidence in this form was supported by Seven, but strongly resisted by the respondents. In the face of that opposition, which was said to be justified by cogent forensic considerations, I formed the view that it was inappropriate to require unwilling parties to have their experts give evidence concurrently with the other experts. 33 As it happened, the expert evidence on competition issues took a substantial, but not excessive amount of hearing time.[38] Nonetheless, with the benefit of hindsight I have little doubt that it would have been feasible for the experts to have given their oral evidence concurrently. Such a procedure would have been likely to save several days of hearing time without any loss of clarity or cogency in the presentation and testing of the experts' opinions. Indeed, I suspect that the market definition issues would have been exposed more starkly had the experts been able to address each other directly than in fact occurred through the orthodox process of cross-examination. What Can Be Done? 34 A useful starting point is to recognise that there is no easy solution to managing mega-litigation. The overriding purpose of civil proceedings is now said to be to facilitate 'the just, quick and cheap resolution of the real issues in proceedings'.[39] The reality is that it is much easier to express that aspiration than to achieve it, particularly in the context of hard-fought litigation between well-resourced opponents. 35 Modern technology is sometimes seen as a solution, or at least a partial solution, to the challenges faced by the judicial system. It is true that the use of information technology at the pre-trial stage and in the conduct of the trial itself can assist in making mega-litigation more manageable. For example, Practice Notes in the Federal Court and the Supreme Court of New South Wales encourage litigants to embrace electronic discovery and electronic exchange of court documents.[40] Making use of information technology in this way undoubtedly has advantages, both for pre-trial processes and the conduct of the hearing. The advantages include creating the capacity to search databases and quickly retrieve information, as well as permitting the more efficient presentation of voluminous evidence in court. 36 It is nonetheless wishful thinking to assume that modern information technology will limit the trend to mega-litigation. On the contrary, making long trials more manageable, paradoxically enough, may actually have the effect of encouraging mega-litigation. For example, the capacity to search electronic databases (which can include hard copy documents by means of imaging software) may encourage the search for the elusive 'smoking gun' and discourage well-intentioned judicial efforts to limit the scope of discovery. Moreover, just as paper discovery has given rise to a new litigation-related industry, electronic discovery has produced its own well-rewarded industry. 37 Certainly electronic trials have many advantages. They enable documentary evidence and other materials referred to in the course of the trial to be identified and located rapidly. Real-time transcript avoids time-wasting disputes about what might have been said by counsel or a witness. It also facilitates precision in questioning by counsel and in dealing with objections. If the pleadings, witness statements and written submissions are in electronic form, the presentation and analysis of complex factual and legal issues is made very much simpler (once the basic technology is mastered) than if the court and the parties are forced to work with hard copy material. 38 Information technology also offers great advantages to the judge faced with the formidable task of assimilating and analysing vast quantities of material. If, for example, written submissions are hyper-linked to the database containing the documentary evidence, the judge and his or her staff can locate exhibits swiftly and can search the databases systematically, confident that the searches are very likely to be exhaustive. It is for this reason that the judgment in the C7 Case emphasises the importance of the court itself (not the parties) controlling the compilation of material in electronic form.[41] Court control of the process, with the assistance of suitably skilled and experienced staff or consultants, is likely to ensure consistency in the presentation of material and increase the chances that the specific needs of the trial judge, both in relation to the conduct of the trial and judgment writing, will be accommodated. 39 While electronic trials have important advantages, it does not follow that they will necessarily reduce the incidence or scope of mega-litigation. Just as electronic discovery may actually encourage the parties to pursue major litigation, an electronic trial makes proceedings that otherwise would be extremely difficult to manage (if not completely unmanageable) more or less feasible. Indeed, the wonders of modern technology can serve to prolong the trial. An example is where real-time transcript provides the opportunity for an instant feed of the proceedings to a remote location at which sundry advisers and experts can give running advice by email as to the lines of enquiry the cross-examiner should explore. In short, electronic trials are better characterised as the outcome of mega-litigation rather than a means of controlling it. 40 I do not mean to imply by this rather saturnine commentary that a trial judge is entirely helpless in controlling the scope and duration of mega-litigation. Within the constraints to which I have referred, the trial judge has powers that allow him or her to exert considerable influence over the conduct of the proceedings. In the C7 Case, procedural directions and rulings in the course of the trial (including evidentiary rulings rejecting the tender of certain expert reports) undoubtedly reduced the length of the trial.[42] Vigorous pre-trial judicial management of mega-litigation, notwithstanding the constraints I have identified, is likely to have a moderating effect on the excesses of the warring parties, if only because even the most resolute of parties or of counsel usually cannot afford to ignore entirely the express wishes of the judge. 41 Nonetheless, judicial influence of this kind is not likely to ensure that the time and resources devoted to mega-litigation are proportionate to what is truly at stake in the proceedings. It is even less likely that the influence of the trial judge will prevent mega-litigation from imposing an unreasonable burden on the judicial system, let alone on the trial judge. If the courts are to acquire and exercise the capacity to curtail the impact of mega-litigation on the judicial system, the role of the judiciary will need to change further. Specifically, the courts will have to adopt even more rigorous and interventionist pre-trial case management strategies. They will also have to demonstrate a greater willingness to exercise stringent control over the parties and their legal representatives in the conduct of the trial itself. 42 One obstacle in the path of these changes is the traditional constraints on the exercise of judicial power, especially by Chapter III courts. In particular a judge is held to stringent standards by reason of his or her role as an impartial and independent adjudicator. 43 The traditional constraints on the exercise of judicial power are well illustrated by the majority decision of the New South Wales Court of appeal in Australian National Industries Ltd v Spedley Securities Ltd (in liq).[43] There a judge managing complex company litigation made findings in interlocutory proceedings in which he criticised the credit and commercial conduct of certain parties. This was held to be sufficient to disqualify the judge from further conduct of the proceedings notwithstanding the judge's view that the disqualification would involve a scandalous waste of judicial resources.[44] Kirby P, one of the majority, thought fit to apply a 'rule of stringency', giving effect to what his Honour considered to be: 'a clear tendency [in the authorities] to uphold the very high standards of manifest neutrality and impartiality which are to be observed by every judicial officer in the courts of Australia '.[45] 44 Despite this ringing endorsement of a rule of stringency, the fact is that if the courts are to exercise more effective control over mega-litigation it will be necessary to loosen some of the conventional constraints. In addition, the courts will need to have available a greater panoply of case management tools and to demonstrate a greater willingness to use them. 45 A move in this direction is suggested by the introduction of fast track procedures for the determination of commercial and other categories of disputes. A recent example is the 'Fast Track List' set up in the Victorian Registry of the Federal Court, on an experimental basis.[46] Parties to commercial proceedings (including certain intellectual property and taxation matters) may elect to commence proceedings in the Fast Track List. Alternatively, a judge may allocate to the List matters that he or she thinks can be resolved 'fairly and adequately' in the Fast Track List. 46 Fast Track List matters are to be conducted in accordance with procedures designed to minimise interlocutory disputes, limit the scope of discovery, shorten the trial and lead to speedy judgments. The features include: stringent time limits for the service of case summaries (in lieu of pleadings); an early scheduling conference at which the parties outline the issues and facts in dispute; limiting discovery to documents on which a party intends to rely and which 'have a significant probative value adverse to a party's case'; limiting parties to a 'good faith proportionate search' for discoverable documents; empowering the trial judge to refuse a party permission to call a particular witness; empowering the trial judge to determine at a pre-trial conference: 'the total time that each party will be allocated at trial to present its case, with due allowance being made for questions from the presiding judge. Each party shall receive a fixed block of time for its oral submissions; a fixed block of time to present its case-in-chief, cross-examination, and any re-examination; and a small amount of flexible time to be used as needed'. restricting written submissions to 15 pages; and the Court endeavouring to deliver judgment within six weeks of the conclusion of a hearing. 47 It remains to be seen whether the Fast Track List will achieve its objectives and, if so, what impact it will have on the Court's remaining (no less important) caseload. The significance of the innovation for present purposes is the implicit recognition that traditional adversary procedures, even within a case management system, must be modified if commercial proceedings are to be resolved more swiftly and cheaply. 48 This proposition must be accepted if the courts are to be able to control mega-litigation more effectively. Judges must be given explicit statutory powers to curtail the scope, duration and expense of mega-litigation exercisable even over the express opposition of the parties. The guiding principle should be the need to ensure that the projected costs of the litigation are proportionate to the relief sought and that an undue burden is not placed on the court or the judicial system. The powers should include: making orders limiting the number and length of expert reports on any issue; refusing permission for potential witnesses to give evidence if, in the opinion of the judge, there are reasonable grounds to think that the probative value of the proffered evidence will be outweighed by the danger that the evidence might cause or result in an undue waste of time;[47] making orders restricting the categories of discoverable documents and imposing limits on the total cost of discovery (to ensure that the costs are proportionate to what is at stake in the proceedings and that, in any event, the costs are not unreasonable); referring specific issues arising in the proceedings to arbitration subject to such directions as the court considers appropriate, including time limits for making a determination;[48] specifying the maximum length of the trial and allocating the available time among the parties; imposing time limits on the presentation of lay evidence (including cross-examination of the opponents' witnesses); imposing page limits on written submissions or similar material and limiting the hearing time (if any) allocated to each party to make oral submissions; giving directions as to the template which the parties must follow in making submissions and which is to constitute the framework for the judgment; providing summary reasons only when giving judgment on any contested interlocutory issue; and specifying the time it is reasonable to expect the trial judge to devote to the preparation of a final judgment, having regard to the issues genuinely in dispute, the other commitments of the judge and the caseload and resources of the court. 49 These powers will need to be reinforced by other statutory provisions. Appellate courts, whose members sometimes have little recent experience in conducting trials,[49] tend to be critical of trial judges who give sparse reasons. If courts are to respond proportionately to mega-litigation (and deal fairly and in a timely fashion with other kinds of litigation) appellate courts must grant leeway to judges faced with the task of preparing a judgment. The legislation should therefore provide that in assessing the adequacy of the reasons for judgment in mega-litigation, an appellate court is to have regard to the trial judge's assessment of the time that should reasonably be devoted to preparing the judgment. 50 The trial judge needs additional statutory protection if effective management of mega-litigation is to become a reality. Effective management, especially at the pre-trial stage, may well require the judge to express or imply views about the apparent strength or cogency of proposed evidence or legal contentions. To express such views frankly might come close to the borders of pre-judgment, if the orthodox principles governing apprehended bias are applied. Effective control of mega-litigation therefore necessitates the judge being granted greater leeway in forming and expressing views at a relatively early stage in the proceedings than might be appropriate if the orthodox principles are to be applied in uniformly stringent manners. 51 The leeway should extend to the trial judge expressing views about the credibility or conduct of a party to, or key witness in, the proceedings, if this is necessary to resolve interlocutory disputes. Once parties become embroiled in mega-litigation, they should not have the right to demand another judge when they choose to present disputes of this kind for resolution. The trial process should be understood - as it is in practice - as a continuum from the institution of the proceedings to final judgment and, indeed, the final determination of any appeals. Those choosing to embark on, or to continue, that process must accept that traditional practices and principles may require modification in the interests of efficiency and fairness to other litigants. 52 Such modifications could facilitate innovations that may startle some who are imbued with the virtues of the traditional adversary system, yet can be justified in the interests of achieving considerable savings in time and costs and improving the chances of the litigation being effectively managed. For example, in a case involving expert evidence there may be advantages to the judge being entitled to consult with an independent expert, both during and after the trial, without having to disclose the substance of discussions to the parties or giving them an opportunity to comment. The ability to consult in this manner would shorten the trial, make the judge's task more manageable and result in quicker judgments. The departure from traditional standards of procedural fairness can be justified not only by the advantages gained in the more effective conduct of mega-litigation, but by the safeguards inherent in the obligation of the judge to give reasons for his or her final decision. 53 In exercising the powers I have identified, the trial judge should be required to have regard to - and indeed give primacy to - the principle of proportionality. In the context of mega-litigation, this principle mandates that the costs incurred by the parties and the public resources devoted to resolving the litigation must be proportionate to the subject matter of the dispute. Moreover, the principle of proportionality requires the court, in making directions for the conduct of the litigation, to take into account its duty to hear and determine all disputes quickly, cheaply and fairly. The duty to act fairly must of course remain, but it should be applied by trial and appellate courts paying due regard to the principle of proportionality. 54 No doubt the legislation that would be required to implement these proposals will present substantial conceptual and drafting difficulties. Nonetheless, since the courts themselves need assistance in coping with mega-litigation, it is critical that legislators recognise that the pure, traditional concept of procedural fairness should no longer govern the conduct of mega-litigation. Too much is at stake for the integrity and effective functioning of the court systems to adhere uncritically to the traditional concept. Conclusion 55 Short of war, global depression and possibly international terrorism, few changes have had more profound consequences than the transformation in recent decades of the world economy. The transformation has been facilitated by the information revolution which, among other things, has rendered traditional forms of communication largely obsolete. Since Australia has been an enthusiastic participant in those developments, Australian courts have had to cope with their by-products, including mega-litigation. 56 Contrary to popular belief, the courts have responded quickly to these developments. They have adopted important initiatives, such as case management strategies, the use of information technology in the conduct of trials and active encouragement of alternative dispute resolution. These measures, however, are not enough, of themselves, to ensure that the challenges posed by mega-litigation will be met successfully. 57 If mega-litigation is not to impose a disproportionate burden on the court system and on the judges, it will be necessary to reassess and modify the traditional view of the responsibilities of the court. Independence and impartiality must remain at the core of the exercise of judicial power. But the content of these concepts must adapt to the new forensic reality. [1] See note 37 below. [2] Seven Network Ltd v News Ltd [2007] FCA 1062 ('C7 Case'), at [1]. The expression has been used from time to time in the literature: see R L Marcus 'Reassessing the Magnetic Pull of Megacases on Procedure' (2001) 51 DePaul L Rev 457, at 458-459; J D Cooke, 'Judicial Method and Technique in Anti-Trust Litigation: The European Courts' (2005) 13 Competition & Consumer L J 1, at 12. [3]See text at notes 5-7 below. [4] S Freud, Civilization and Its Discontents (translation by Joan Riviere, Hogarth Press, 1930). [5] C7 Case, at [8]. Examples include Bell Group Ltd v Westpac Banking Corporation (Supreme Court of Western Australia, 404 hearing days) and Australian Securities and Investments Commission v Rich (Supreme Court of NSW, 220 hearing days, without final oral submissions). [6] Duke Group Ltd (in liq) v Pilmer [1998] SASC 6529; (1998) 27 ACSR 1 (Supreme Court of South Australia). [7] For the aftermath, see Three Rivers District Council v The Governors and Company of the Bank of England [2006] EWHC 816 ('BCCI Case'). The sorry saga, including the extensive interlocutory proceedings, is acutely analysed by A Zuckerman, 'A Colossal Wreck: the BCCI-Three Rivers Litigation' (2006) 25 Civil Justice Q 287. [8] See the judgment of Tomlinson J in the BCCI Case, note 7 above. [9] In competition cases, for example, the very survival of a firm alleged to have engaged in monopolistic behaviour may be at risk. [10] The deficiency on the collapse of the HIH Group in early 2001 was estimated by the HIH Royal Commission at between $3.6 and $5.3 billion: 'The Failure of HIH Insurance', Report of the HIH Royal Commission (2003), Vol 1, Chapter 3.7. [11] A M Gleeson, 'Individualised Justice - The Holy Grail' (1995) 69 Australian L J 421. [12] Trade Practices Act 1974 (Cth) ('Trade Practices Act'), s 52(1) and State counterparts. [13] Akron Securities Ltd v Iliffe (1997) 41 NSWLR 353, at 364, per Mason P. [14] A M Gleeson, note 11 above, at 430. [15] See Federal Court of Australia Act 1976 (Cth), Part IVA. See, generally, D Grave and K Adams, Class Actions in Australia (Lawbook Co, 2005). [16] The Trade Practices Act,s 80, permits any person to institute proceedings to restrain conduct that contravenes the consumer protection or competition provisions of the legislation. The constitutional validity of s 80 was upheld by the High Court in Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd [2000] HCA 11; (2000) 200 CLR 591. [17] Australian Federation of Consumer Organisations Inc v Tobacco Institute of Australia Ltd (1991) 98 ALR 670, affirmed sub nom Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1. These proceedings can fairly be described as mega-litigation even though multiple parties were not involved. [18] R Sackville, 'Some Thoughts On Access to Justice' (2004) 2 New Zealand Journal of Public International Law 85. [19] Judge Shira A Scheindlin, 'E-Discovery: The Newly Amended Federal Rules of Civil Procedure' in Moore's Federal Practice (2006), at 2. The other material in this paragraph is derived from this source. [20] The amendments are reproduced by Judge Scheindlin, together with the Committee's Notes, note 19 above, at 32 ff. What follows is based on Scheindlin, note 19 above, at 2-3. [21] The ubiquity of potential electronic evidence is illustrated by the practice of some divorce lawyers in the United States who subpoena electronic toll-booth records, in the hope of locating 'hidden gems': R L Marcus, 'E-Discovery and Beyond: Toward Brave New World or 1984?' (2006) 25 Rev Litig 633, at 659. [22] Including metadata, which provides information as to when a document was created, who created it and when it was last accessed or edited. [23] C7 Case, at [15]. ESI admitted into evidence, especially internal emails, proved to be extremely important in making findings on disputed factual issues. If the C7 Case is any guide to commercial practice generally, business people have a tendency to express themselves more forthrightly in emails than in more formal correspondence. [24] C7 Case, at [482]. [25] C7 Case, at [488]. [26] C7 Case, at [152]. [27] Trade Practices Act, Pt XIC. [28] C7 Case, at [2806]. [29] See generally R Sackville, 'Reforming the Civil Justice System: The Case for a Considered Approach' in H Stacy and M Lavarch, Beyond the Adversarial System (Federation Press, 1999), at 34-67; R Sackville, 'Courts in Transition: An Australian View' [2003] New Zealand Rev 185. The material in the paragraph is based on the latter article. [30] R Sackville, 'From Access to Justice to Managing Justice: The Transformation of the Judicial Role' (2002) 12 JJA 5. [31] Federal Court of Australia Act 1976 (Cth), s 53A; Federal Court Rules ('FCR'), O 72. [32] See Federal Court of Australia Act 1976 (Cth), s 31A; FCR, O 11 r 16. [33] Section 31A(3) of the Federal Court of Australia Act of Australia Act 1976 (Cth) specifically provides that a defence or a proceeding need not be hopeless or bound to fail for it to have no reasonable prospect of success. [34] FCR, O 10 r 1(2)(d). [35] Following a discussion between the bench and Optus' senior counsel, Optus decided not to tender a report prepared by its competition expert. [36] C7 Case, at [22]. [37] Uniform Civil Procedure Rules 2005 (NSW), r 31.35(c)-(e). See, too, FCR, O 34A r 3(2)(e)-(g). [38] The evidence of the competition experts consumed ten hearing days. [39] Civil Procedure Act 2005 (NSW), s 56(1). Compare Federal Magistrates Court Act 1999 (Cth), s 3, which provides that the objects of the legislation include enabling the Federal Magistrates Court to operate as 'informally as possible' and 'to use streamlined procedures'. [40] Federal Court of Australia, Practice Note 17, 20 April 2000 ('Guidelines for the use of information technology in litigation for any civil matter'); Supreme Court of New South Wales, Practice Note No. SC Eq 3 (applicable to the Commercial List and the Technology and Construction List in the Equity Division). [41] C7 Case, at [49]. [42] C7 Case, at [10]. [43] (1992) 26 NSWLR 411. [44] (1992) 26 NSWLR, at 413. This view was shared by Meagher JA, one of the majority, at 448. [45] 26 NSWLR, at 418. Interestingly, Kirby J was the only dissenter in two more recent High Court cases rejecting claims of apprehended bias in relation to trial judges: Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2001) 205 CLR 337; Smits v Roach (2006) 228 ALR 262. [46] Victorian District Registrar, Notice to Practitioners, 2 May 2007. [47] Cf Evidence Act 1995 (Cth), s 135. [48] At present the Federal Court can refer matters to an arbitration only with the consent of the parties: Federal Court of Australia 1976 (Cth), s 53A(1A). Chapter III issues may arise if federal courts are empowered to compel the parties to arbitrate. The Supreme Court of New South Wales has power at any stage of the proceedings to refer the whole of the proceedings, or any question in the proceedings, to a referee appointed by the Court for inquiry and report: Uniform Civil Procedure Rules 2005 (NSW), r 20.14. [49] But not in the Federal Court, whose members undertake both trial and appellate work.